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State of the State Houses

By Joseph Caruso • April 09, 2018 • 0 Comments
State of the State Houses is an occasional feature that provides the status of legislation before state legislatures relevant to NTSA members.

Pension Reform


California. CA SB 1149 would create a new optional defined contribution plan for new state employees who are eligible to become members of CalPERS and who choose not to make contributions into the DB program. The bill also would:

  • Require state employees who opt to participate in this alternate system to contribute the same percent of compensation as similarly situated employees who contribute to the DB program, subject to applicable limits of federal law.

  • Authorize an employee in the DC program, after five years, to have the right to continue in the program or switch to the DB plan, subject to certain terms and conditions.

Status: The hearing that had been scheduled for April 9 was canceled at the request of the bill author and has been rescheduled for April 23.

Standard of Care/Disclosure


Maryland. On March 19, the Financial Consumer Protection Act of 2018 (MD SB 1068) passed out of the Maryland Senate Finance Committee favorably with amendments just a week after the companion bill (MD HB 1634) successfully passed through the House of Delegates with similar modifications.

As initially drafted, the Financial Consumer Protection Act of 2018 would have created a fiduciary duty for broker-dealers, insurance agents, and investment advisers to act ‘primarily for the benefit of its clients.’ Not only would this provision have further complicated the regulatory burden for firms and professionals alike, but the fiduciary standard it would have established could have resulted in a preemption conflict with ERISA.

In early March, the American Retirement Association government affairs team reached out to the lead sponsor of SB 1068, Sen. Jim Rosapepe (D), to communicate its concerns regarding preemption. Rosapepe subsequently referred us to the Office of the Maryland Attorney General with whom we have arranged a meeting to further communicate our position. Those concerns were heard — the Senate version of the bill now no longer includes the fiduciary obligation and now directs the Maryland Financial Consumer Protection Commission to study:

1. the DOL rule and any Securities and Exchange Commission actions in addressing conflicts of interest of broker-dealers offering of investment advice by aligning the standard of care for broker-dealers with that of the fiduciary duty of investment advisers; and
2. changes to state law to provide the protection intended by the U.S. Department of Labor conflicts of interest rule addressing fiduciary duty standards of care.

Status: HB 1634 passed through the Senate on April 6 with amendments and those amendments were accepted by the House on April 7 which passed the enrolled bill upon a third reading.

Joseph A. Caruso, III, JD, MSPPM, is Government Affairs Counsel for the American Retirement Association.

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